P18B INVESTMENT IN SRP’S KAWIT ISLAND
Cebu City Mayor Tomas Osmeña shows the proposed P18-billion project that JG Summit plans to construct at the South Road Properties. Under the proposed agreement with City Hall, JG Summit will lease the eight-hectare Kawit Island lot for 50 years, after which the property and its development will revert to the city government of Cebu.
CDN PHOTO/INNA GIAN MEJIA
MAYOR OSMEÑA’S BIG REVEAL
More investors are eyeing the South Road Properties (SRP).
The latest prospective investor is the John Gokongwei–founded JG Summit Holdings Inc., a highly diversified conglomerate that is proposing an P18-billion development in the Kawit Island property within the SRP in partnership with the city government of Cebu.
The “big announcement” was made yesterday by Mayor Tomas Osmeña, who had already hinted about the news last week.
In his press conference yesterday, Osmeña said JG Summit wants to lease the eight-hectare Kawit property for 50 years to build a hotel, convention center and casino, among others.
“It is in their interest to start right away. The clock starts ticking now. With this announcement, it should bring prices up in the SRP,” he told reporters.
JG Summit, which is controlled by the Gokongwei family, has vast interest in air transportation (Cebu Pacific), banking, petrochemical, power generation and distribution, real estate and hotel and telecommunication, among others. It also owns the Robinsons malls and Universal Robina (food).
Osmeña said the biggest impact of the proposal, aside from providing 8,000 jobs, is the expected increase in appraisal rates for the lots in the SRP especially since the city is already planning to sell another three-hectare lot in the SRP.
Skepticism
But the announcement was met with raised eyebrows by some opposition councilors in the city who pointed out the “irony” and apparent “favoritism” by the mayor in terms of handling locators and investors in the SRP.
Councilor Joel Garganera, a known critic of the mayor, said the mayor does not look convincing especially after blocking the developments of existing locators in the SRP like SM Prime Holdings Inc. and Filinvest Land Inc.
“Before he tries to showcase a new development there, there are existing investors already. Why don’t we put the green light for them?” he said.
“He is not in the position to talk about development because as we see him right now, he is anti-development and anti-progress,” he added.
Garganera was referring to planned developments in the SRP that have been stalled allegedly by the mayor’s office including the construction of a Cebu Ocean Park as well as a world-class arena by SM, which was part of the city’s conditions when it sold the 26-hectare SRP lot in 2015 to the consortium of SM and Ayala Land Inc.
Mayor Osmeña has been questioning the legality of the 2015 sale, which was made during the time of former mayor Michael Rama, saying the resolution authorizing Rama to sell the properties superseded an earlier ordinance which prevented the sale of the lots.
The SM-Ayala consortium gave a bid of P10 billion for the 26-hectare SRP lot in 2015.
On the other hand, Filinvest won the bidding for the other 19.2-hectare lot with the highest bid of P6.758 billion. However, last February, Filinvest and the mayor announced that they have agreed to rescind the sale, which is still being worked out until now.
Interestingly, the other bidder for the 19.2-hectare SRP lot won by Filinvest in 2015 was JG Summit, which offered a lower bid of P4.21 billion for the same lot.
‘Selective’
Councilor Raymond Alvin Garcia, also an opposition member, agreed to the observation of Garganera on the irony of the mayor’s dealings with investors in the SRP.
While he said he will support any development and investment that is advantageous to the city, Garcia said the city should not play favorites.
“Once again, this is selective enforcement. This is favoritism on the part of the mayor. On one hand, SM was supposed to build a stadium and an ocean park. But they were not given go signal by the mayor’s office because this is an SM investment,” he said.
“It is still selective. In the same manner that the mayor is selective in the enforcement of laws. You see again the double standards,” added Garcia, who is a lawyer.
But Garcia clarified that he will support any proposal for investments in the SRP after proper scrutiny of its terms and conditions and contract provisions.
For example, he lamented that the city is at a disadvantage with its joint-venture project with Filinvest for the 40-hectare City di Mare development wherein the city is supposed to get a share from the sale of the condominiums in the property but has not been getting high revenues.
In comparison, he said the 2015 sale of the SRP lots during the time of Rama gave the city P16 billion in revenues, half of which was immediately paid by the winning bidders last 2015.
But the revenues, which are now in the city’s coffers, are not being touched by the Osmeña administration.
Lease share
The Cebu City Council has earlier approved an ordinance authorizing the mayor to sell another three hectares of the SRP at a rate of at least P110,000 per square meter.
According to Mayor Osmeña, this new proposal from JG Summit should bolster the city’s planned sale and would even bring in higher bids from interested developers.
JG Summit’s unsolicited proposal, he said, will be composed of four towers which will include a hotel with 1,000 rooms, a restaurant, a casino and a convention center, among other amenities.
Based on initial discussions, the city will get a 10–15 percent share from the sales of the development.
“But we will always own the property. If they make more income, we will get 10 percent of the more income. After 50 years, we will own the building and everything,” he said.
Osmeña said the details are still under discussion, which means there may still be changes in the plans in the future.
The proposal, however, still has to go through the City Council for approval. Should the members of the council agree on the project, a public tender will be launched.
The project will take three years to complete once it is started.
“We will close the deal as soon as possible. We will start (the construction) as soon as possible,” he said.
Osmeña said he suggested that the project be named “Isla De La Victoria.”
He explained that to give the project historical significance, it will be named after the slain Cebu City Bantay Dagat project director Elpidio “Jojo” de la Victoria.
“He was active in protecting the environment against illegal fishing. At least, we have a storyline,” he said.
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